Macroeconomic Forecast Armenia

Armenian headline consumer price inflation (CPI) came in at 8.5% year-on-year (y-o-y) in June, down from 9.0% in May, and an improvement on the double-digit y-o-y inflation rates recorded in the first months of the year. While a drop in food prices saw the overall index decline, core inflation accelerated in June, to 6.7% from 6.1% in May and 5.8% in April. For the time being we believe that the central bank will unlikely hike rates beyond 8.50% after monetary policy-makers already hiked rates by a total of 125 basis points so far this year. We see CPI averaging 8.8% this year as H211 inflation will be lower than the 9.9% average seen in the first six months of 2011.

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